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What affects your credit rating?
Making sure that you’re managing your borrowing responsibly is the key to unlocking the best deals on all kinds of credit, but we understand that things don’t always go to plan.
You might already know that missing payments or paying late on a credit card, loan or mortgage can have a negative impact on your credit history – and as a result your credit rating or score. However, these aren’t the only cases where your credit history can suffer. Below, we’ll highlight some of the areas that could affect your credit report that you might not be aware of.
Missing mobile phone, insurance, utility bill payments or even rent
You might not realise it, but mobile phone contracts are usually a credit agreement (as are pay monthly insurance policies) and may show up on your credit history – along with any missed or late payments.
Some utilities firms also send information about whether you have been paying your gas, electricity or water bills on time each month to the credit reference agencies too. And, some social landlords are testing sending rent payment information. The idea is that, if you do make these important payments on time, they will actually help you build your credit history. But of course the opposite is true – missed and late payments will have a negative impact. Not all providers are doing this yet, but it is worth checking if yours are.
How often you move home
It’s likely that you’ll move home at some points in your life, and it’s understandable that doing so is something you don’t always have control over. However, it’s worth bearing in mind that moving house frequently could influence your lender’s decision.
Hopping from home to home makes it more difficult for lenders to view you as a stable borrower, so this may affect your chances of being accepted for credit. Of course, this shouldn’t put you off moving home – it’s only something to consider if you find yourself jumping between addresses often. What’s most important is that, when you do move, you update your address with all your financial service providers, as well as your driving licence and the electoral roll. When lenders check your identity, they will want to see that the address that you tell them you live at matches these official records.
Signing up to the electoral roll
As we said above, it’s important that lenders can see official confirmation of where you live and where you have lived for the past three years. One thing that can help with this is to ensure that whenever you move, you register on the electoral roll at your new home.
Being financially linked to someone with a poor credit history
Have you ever taken out a joint bank account with someone? How about a joint line of credit? Whether you took out a joint mortgage or loan, the chances are your finances will be linked with the person you took the credit out with.
If you’re concerned someone you know might be affecting your chances of getting credit, head to our blog here which can help you identify whether you need to take action.
Incorrect information on your credit report
Occasionally, mistakes may appear on your credit history, and in some cases these can affect your chances of being accepted for credit. Sometimes these mistakes will be due to the lender, or they may be the fault of the credit reference agency. That’s why it’s worth checking your credit history regularly to keep on top of things.
Making too many credit applications or having too much credit
Applying for several lines of credit in quick succession can also work against you. In most cases, when you make a credit application, a mark – also known as a “footprint” – is left on your credit history. So, if you keep applying because you keep being rejected, this could actually further reduce your chances of being accepted, as it makes you appear “desperate” for credit. It’s best to look at your credit history using either Noddle or ClearScore to find out any issues before continuing.
Even if you’re approved for several credit cards, for example, future lenders may view you as a risk because of the high level of credit you have access to already.